Company Update: Reliance Industries

Company Update: Reliance Industries

Reliance Industries (RIL) has closed five of its seven polyester and petrochemical units at Patalganga near Mumbai soon after offering exit option to employees.

The move, which comes in the backdrop of a global slowdown, aims to improve profit margin amidst falling demand for polyester products worldwide.

According to reports the company has shut down plants for manufacturing polyester filament yarn (PFY), polyester staple fibre (PSF), paraxylene (PX), purified terephthalic acid (PTA) and linear alkyl benzene (LAB).

However, it is yet to close down the second units of PSF and PFY. For the last one month, production from these units has been partly paralysed and employees were sitting idle.

The company has plans to convert the Patalganga site into a warehousing facility for retail activities due to its proximity to Mumbai.

RIL had recently converted another IPCL facility in Navi Mumbai into Reliance Corporate Park, which is envisaged to be the controlling hub for the Mukesh Ambani group’s global operations.

It plans to upgrade and automate most of the old polyester units since the profit margin from operations have shrunk after the price rise of crude oil, the raw material for polyester.

RIL had shut down its polypropylene plant at the Jamnagar refinery complex for a month to improve product swing capability and increase propylene yield.

We maintain a BUY on the stock with a target price of Rs1,880.